All posts by Aanand Kharde

Indian-Americans and U.S. Politics Blog

Sequestration all set to squeeze the life out of Small Business

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We now face a make-or-break moment for the middle class and those trying to reach it. After decades of eroding middle-class security as those at the very top saw their incomes rise, it is time to construct an economy that is built to last. But the major roadblock ahead is facing the prospect of “sequestration“-or of the budget cuts that will be required to avoid it.

What is Sequestration?

Under the Budget Control Act of 2011 signed by President Obama as part of an agreement with Congress to resolve the debt-ceiling crisis, sequestration is the automatic reduction of spending which will trigger if the spending exceeds certain “caps” set out by the Act. Sequester originated when debates over deficit reduction saw the American government almost default on its debt payments. In order to avert that crisis, Democrats and Republicans agreed that unless they struck a deal on shrinking the country’s debt, cuts would be made to federal spending. The idea was that the prospect of cuts to social services would motivate the Democrats and hurting military spending would do the same for Republicans, issues important to respective parties.

Impact of Sequestration on Small Businesses

Many companies are already being affected by the cuts, particularly those working on federal contracts as government agencies have been holding back on signing new contracts. They’ve also held off approving funds for existing contracts — for example, multi-year contracts that require money to be approved periodically or in increments. This has caused uncertainty about what might happen and when once the cuts are made. Anxiety about budget cuts has been one reason why small businesses have been slow to hire in recent months. Economists warn that these cuts could push the country into another recession.
A study by researchers at George Mason University and the economic forecasting firm Chmura Economics and Analytics estimated that small businesses across the country would lose more than 950,000 jobs as a result of the budget cuts. More than 157,000 of those job losses would come from federal contractors, with the rest from subcontractors catering to contractors and their employees. The study was led by George Mason professor Stephen Fuller, who has studied the impact of public policy on the local economy.

It’s not known how many small businesses would be hurt, or how much revenue they would lose but according to The Small Business Administration there are about 130,000 small companies with federal contracts.

The 2014 budget proposes cutting nearly $10 million from the U.S. Small Business Administration’s signature Small Business Development Center program, and funneling about $40 million into new entrepreneurial development programs.

With over 12 million people unemployed, small business is critical to accelerating the economic recovery and creating the jobs America needs. According to the Bureau of Labor Statistics, small businesses have created about two out of every three jobs gained over the past 35 months and have added jobs in every quarter since early 2010. But since the recession began, U.S. commercial banks’ small business loan portfolios are down 17 percent. And loans under $100,000 have declined even more steeply, over 19 percent. During that same period, the Small Business Administration supported over $100 billion in new lending to over 218,000 small businesses. In better times considered the lender of last resort, the Small Business Administration, for many small businesses, has become the only option. The agency’s loans have become a lifeline for the franchise industry and other segments that weathered the recession better than most.
Limiting job creators’ access to capital at this critical point in the life of our nation’s economy is a profoundly bad idea. We are depending on our small businesses to grow and put our communities back to work. Eventually it rests with our elected leaders to put aside their risky, partisan gamesmanship and come together to pass legislation and enact the policy in a way that reflects our national needs and priorities.
What can be done?

It also doesn’t help small businesses or the economy as a whole when special tax treatment is given to hedge fund managers and Wall Street powerhouses. The controversial “carried interest loophole” lets finance titans pay a top tax rate of 20 percent on part of their earnings, only half of what they would pay at the top rate for normal wages and salaries.
The bottom line is that policymakers concerned about our economy should be leveling the playing field for small businesses, not perpetuating tax breaks for the big boys. The CBO estimates that ending subsidies to gas and oil companies would shore up $40 billion over 10 years and closing the carried interest loophole could raise $21 billion. Together, these measures would significantly offset cuts caused by the sequester.
However, finding short-term solutions to ongoing budget crises shouldn’t be the end goal. Small businesses want policymakers to resolve this problem for the long term so they and our economy have the sustained fiscal certainty they need to thrive.
The Time to Act is NOW

Alliance for U.S. India Business (AUSIB) is organizing a Government Contractors Session focusing on the “Sequestration, its short and long term impact on small business growth & regulatory relief” on Tuesday, July 23, 2013 at the Capitol Hill, Washington DC. The session will be graced by some of the most eminent speakers, the people who matter. They are:

• Congressman Sam Graves: Chairman, Small Business Subcommittee
• Jordan Valdes: Senior Advisor, SBA Office of International Trade
• CIO and OSDBU*s from some key agencies
• Congresswoman Yvette D. Clarke: Small Business and subcommittee of contracting and work force
• Senator James Risch: Small business and Entrepreneurship subcommittee
As our lawmakers debate, spending sequestration, healthcare, and immigration reform will have long-lasting impact on businesses across the country. In other words it will decide how quickly we can put our unemployed back to work. The AUSIB Small Business Forum will provide a unique insight on these key issues. The one-day session will feature lawmakers and agency officials who will be responsible for crafting and implementing programs that will determine how business interacts with government.
Do not miss this opportunity to get access and information that can provide you with an edge over your competition!

RSVP: events@usinpac.com, Call: 202-276-7946.
*Office of Small and Disadvantaged Business Utilization

 

India-US Relations Blog

The Desi Factor in U.S.-India Relations

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According to a new Gallup survey, more than two-thirds of the U.S. public has a positive impression of India, a score that even edges out Israel’s traditionally-high favorability rating.  This is the latest indicator of how decisively American perceptions about the country have changed.  Not too long ago, India was regarded as the very epitome of what the term “Third World” meant – decrepit, destitute and pitiable.  Yet in a relatively short period of time, the popular view of India has changed in critical ways.

For many decades most Americans were inclined to the views of President Harry S. Truman, who dismissed India at its birth as an independent state as “pretty jammed with poor people and cows wandering around streets, witch doctors and people sitting on hot coals and bathing in the Ganges.”  His Secretary of State, Dean Acheson, had an even more incisive perspective: “by and large [Indians] and their country give me the creeps.”  When Daniel Patrick Moynihan was U.S. ambassador to India from 1973-75, he regularly lamented that Washington was utterly indifferent to the country’s fate; writing in his diary, he confided that it “is American practice to pay but little attention to India.”  In a cable to the State Department, he complained of dismissive attitudes, “a kind of John Birch Society contempt for the views of raggedly ass people in pajamas on the other side of the world.”

Public opinion kept close track with official attitudes in Washington.  Harold Issacs’s classic 1958 survey of U.S. elite opinion, Scratches on Our Minds, revealed that influential Americans held very negative perceptions of the country, associating it with “filth, dirt and disease,” along with debased religious beliefs.  A State Department analysis prepared in the early 1970s found that U.S. public opinion identified India more than any other nation with such attributes as disease, death and illiteracy, and school textbooks throughout this period regularly portrayed it in a most negative light.  This view was again underscored in a 1983 opinion poll, in which Americans ranked India at the bottom of a list of 22 countries on the basis of perceived importance to U.S. vital interests.

So, what accounts for the significant shift in perceptions?  An obvious part of the answer lies in the dramatic turnabout in Indian prospects launched by the 1991 economic reforms.  For all the attention lavished on China these days, Jim O’Neill, the progenitor of the BRICs acronym, contends that India still “has the largest potential for growth among the BRICs countries this decade.”  A recent Citibank report concludes that India will likely be the world’s largest economic power by 2050 and, according to International Monetary Fund data, India supplanted Japan as Asia’s second-largest economy last year.  President Obama routinely points to Bangalore as a threat to America’s competitive advantage while Lawrence H. Summers, his former chief economics adviser, touts the virtues of the Indian development model.  And the jugaad concept, once seen as a sign of backwardness, is now viewed as an innovative approach to business management.

Another prominent piece of the explanation lies in U.S. admiration for India’s durable democratic traditions.   The concept of democratic India had particular appeal to George W. Bush, who engineered a remarkable transformation in bilateral affairs.  Robert D. Blackwill, who served as Bush’s first ambassador to New Delhi, recalls asking Bush as he geared up his presidential campaign in early 1999 about his special interest in India.  Bush immediately responded, “a billion people in a functioning democracy. Isn’t that something? Isn’t that something?”

But a less obvious, though equally important, factor is also at work: The increasing stature of Indians in American society has changed how all Americans think about India.  Consider the following examples:

  • The election of Bobby Jindal and Nikki Haley to the governorships of Louisiana and South Carolina (respectively), states in the heart of the Old Confederacy.
  • The entertaining television ad Intel ran a few years back lauding the rock star status of Ajay Bhatt, the co-inventor of the USB computer connection.
  • The ubiquitous presence of Sanjay Gupta, CNN’s chief medical correspondent. In 2003, he was named as one of the world’s sexiest men by People magazine and a “pop culture icon” by USA Today. And in 2009 he was mentioned as President Obama’s choice as Surgeon General of the United States, the country’s top public health official.
  • The winner and the two runners-up of last year’s national spelling bee were Indian-American children.  It was the fifth consecutive year, and the tenth time in the last 14 years, that an Indian American won.  The top four positions in the 2012 National Geographic Bee were also Indian-American kids.
  • Last summer witnessed a high-profile Desi clash– the successful prosecution on insider trading charges of Rajat Gupta, McKinsey & Company’s former chief executive and an iconic figure in the Indian diaspora, by Preet Bharara, the U.S. attorney responsible for Wall Street.  Bharara was named last year to TIME magazine’s roster of the world’s 100 most influential people and Bloomberg Market’s “50 Most Influential” list.

Large-scale Indian migration to the United States did not begin until the late 1960s and though the community remains relatively small – less than one percent of the overall U.S. population – it is one of the country’s fastest-growing ethnic groups.  But the community’s growing success has given it an influence and impact wholly disproportionate to its size.  As one analyst puts it, “Indians in America are emerging as the new Jews: disproportionately well-educated, well paid, and increasingly well connected politically.”

According to a recent Pew Research Center report, 70 percent of Indian immigrants to the United States have at least a college degree, compared to the national average of 28 percent, and Indians lead all other Asian sub-groups in income and education levels.  This finding echoes another PRC study that Hindu Americans possess the highest socio-economic accomplishments of any U.S. religious community.

Indians have become a driving force on the U.S. business landscape.  According to a new Kauffman Foundation report, Indian immigrants established one-third of Silicon Valley start-ups in 2006-2012, up from about 7 percent in 2005.  Indeed, Indians founded a markedly greater number of engineering and technology firms than did immigrants from other countries, including those from China and the United Kingdom.  And a RAND Corporation study reports that Indian-American entrepreneurs have business income that is substantially higher than the national average and higher than any other immigrant group.

The success and prosperity of the Indian community has had a real impact on U.S. foreign policy.   First, it has helped change public opinion on India in relatively short order, since it is difficult to dismiss or disparage a country that has produced immigrants who have become so rapidly admired in U.S. society.

Second, the growing impact of the Indian American community catalyzed stronger interest about India on Capitol Hill beginning in the mid-1990s, helping in turn to reverse Washington’s traditional disregard of the country – recall, for instance, how the U.S. ambassador’s post in New Delhi was vacant for the Clinton administration’s first year. Pro-India caucuses in the U.S. Congress played an important role in the lifting of U.S. economic sanctions levied against India in the wake of its 1998 nuclear tests, and in securing the ratification of the landmark U.S.-India civil nuclear agreement a decade later. Today, a third of the members of the U.S. Senate and House of Representatives belong to these caucuses.

Third, the Indian-American community has been at the forefront in building critical societal linkages between its native and adoptive countries. Consider, for example, the dynamics at work more than a decade ago. At the same time as Washington was imposing sanctions in response to the 1998 nuclear tests, concerns about the “Y2K” programming glitch led businesses on both sides to set the foundation for today’s strong technology partnership. The significant role played by these societal bonds leads Fareed Zakaria to compare U.S.-India ties to the special relationships the United States has with Great Britain and Israel. And Shashi Tharoor, formerly India’s minister of state for external affairs, has likewise remarked that “in 20 years I expect the Indo-U.S. relationship to resemble the Israel-U.S. relationship, and for many of the same reasons.”

Although they are often overlooked by national policymakers, non-governmental ties fostered by the Indian-American community will be one key in securing the long-term growth of the new bilateral partnership.  As Shivshankar Menon, now Prime Minister Singh’s national security advisor, remarked a few years back, “[I]f anything, the creativity of [American and Indian] entrepreneurs, engineers and scientists has sometimes exceeded that of our political structures.”

This commentary is cross-posted on Chanakya’s Notebook. I invite you to connect with me via Facebook and Twitter.

Defence And Strategic Affairs Blog

Blood Feud in Islamabad Complicates U.S.-Pakistan Relations

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A long summer of political turmoil has begun that makes harder the search for a new equilibrium with Washington

A tale of two capital cities in the grip of political uncertainty unfolded in South Asia last week.   Islamabad was the scene of a fast-paced soap opera that throws into further doubt the future of the democratization process and complicates efforts to repair the breakdown of U.S.-Pakistan relations.  Meanwhile in New Delhi, simmering tensions within the coalition government erupted into open revolt, further constraining decision-making at a time when the United States in seeking to draw closer strategically.

This post will focus on the Pakistani case, the more acute of the two; a subsequent post will deal with the political tussles in India, which might ultimately prove to be cathartic.

Pakistan has long been marred by political ructions that have more to do with clashing personalities than principled disputes.  The country’s trajectory might well be materially different absent the blood feud between Benazir Bhutto and Nawaz Sharif in the 1990s.  Likewise the on-going vendetta between Sharif and Asif Ali Zardari, Pakistan’s current president and Bhutto’s widower, is impeding progress on critical national problems as well as tarnishing the very concept of democratic governance.

Yet even against this background, last week’s events were extraordinary.  Striking, too, was how, with the country once again earning a top place in the roster of failed states, Pakistan could reliably be counted on to give credence to that dubious billing.   This time Zardari and Iftikhar Chaudhry, the Supreme Court’s chief justice, were the ones spewing bad blood, in the process upending a tenuous measure of political stability that had recently emerged in Islamabad.

Since its installation in March 2008, Zardari’s government has been in a running struggle with the powerful military establishment and an assertive judiciary.  These ructions have given rise to persistent fears of yet another army coup – as recently as earlier this year – as well as accusations that the Supreme Court is acting in cahoots with the military to undermine Zardari and his prime minister, Yusuf Raza Gilani.  Against heavy odds, however, the two somehow managed to limp along.  Last month Gilani became the country’s longest-serving prime minister, a signal accomplishment in view of how many of his predecessors have been hanged, exiled and otherwise forcibly evicted from office.  And while his administration was highly unpopular and hardly a model of competence, it was well on its way to becoming the country’s first democratically-elected government to serve out its allotted five-year term.

Yet this past week, the Supreme Court suddenly sent Gilani packing on the grounds that his contempt-of-court conviction in April disqualified him from holding office and serving in parliament.  The conviction stemmed from Gilani’s defiance of the court’s order to reactivate a dormant money-laundering case brought by the Swiss government against Bhutto and Zardari.  Chaudhry’s focus on the case strikes many observers as overzealous, given Swiss reluctance to re-open the investigation, the constitutional immunity Zardari enjoys as president, and the long record of Islamabad power brokers using corruption allegations to harass political opponents.

Chaudhry justified Gilani’s removal as demonstrating the rule of law in a country where governmental malfeasance is endemic.  Some commentators view the action as part of the institutional skirmishes that can be expected in Pakistan’s halting democratic transformation and note that Chaudhry also has turned his attention on abuses perpetuated by the security establishment.  An activist Supreme Court that sees itself as a guardian of the public integrity has likewise emerged in neighboring India.

But Gilani’s dismissal appears to be less about the advancement of constitutional concepts than the settling of personal scores.  The chief justice, a hero of the popular movement that forced Pervez Musharraf into exile, is reportedly indignant that Zardari refused, until forced to bow to public pressure, to reinstate him to the bench after Musharraf sacked him at the start of the state of emergency that was declared in November 2007.  Once returned to the court, Chaudhry promptly struck back by invalidating a general amnesty that Musharraf had forged with Bhutto and Zardari, thereby opening Zardari to criminal prosecution once he leaves the presidency.

The rationale and timing of Gilani’s ouster also seems suspect.  Since parliament is the only body empowered to dismiss a prime minister, many observers (here and here) describe it as a sort of judicial coup.  Moreover, when the Supreme Court first convicted Gilani on contempt charges, it seemed content to limit itself to the highly symbolic sentence it meted out – detention amounting to mere seconds.  Its abrupt ruling last week has led some to conclude that it was a diversion meant to deflect attention away from bribe-taking accusations against Chaudhry’s own son, which Zardari’s camp may be orchestrating.

Gilani’s removal proved to be the opening act of a chaotic week.  Zardari quickly settled on Makhdoom Shahabuddin as a replacement, only to have a court issue an arrest warrant for the man.  The warrant has to do with Shahabuddin’s alleged involvement in a drug importation scandal while he was serving as health minister.  Significantly, the court acted upon the request of an anti-narcotics body run by the military.  Gilani’s son is also implicated in the matter and a warrant was similarly issued for his detention.

Zardari’s second choice, Raja Pervez Ashraf, easily won parliamentary approval by week’s end but he, too, has had run-ins with the judiciary.  The Supreme Court earlier ended his stint as the federal minister in charge of power production when it found that a program he oversaw to spur private generation of electricity was riddled with graft.  Ruling that he is “liable both for civil and criminal action,” the court has instructed the National Accountability Bureau, an anti-corruption agency, to open an inquiry.

Given Chaudhry’s doggedness on the matter, Ashraf is unlikely to be left off the hook regarding Zardari’s corruption case, opening up the possibility that he, too, could be removed from office in short order.  And another opportunity to nettle the president will arrive in the coming days as the Supreme Court moves forward on the bizarre Memogate affair.  A judicial commission earlier this month concluded that Zardari confidante Husain Haqqani was guilty of disloyalty to the nation during his recent stint as Pakistan’s ambassador in Washington.  The finding opens Haqqani open to possible treason charges and has become another political headache for the beleaguered Zardari.

As argued in a previous post, the rising tumult of domestic politics is exacerbating the strains in U.S.-Pakistan relations and complicating efforts to resolve the seven month-long blockade of NATO supply lines into Afghanistan that is costing Washington a $100 million a month as cargo is shipped via more expensive routes in Central Asia.  A quick end of the dispute is very much in Islamabad’s interests and on several occasions appeared to be within reach.  The thread-bare public treasury – not to mention the Pakistani army’s vast business empire – is in desperate need of revenue that would come from increased transit fees as well as the $3.5 billion in military and economic assistance that the Obama administration has requested for the upcoming fiscal year.  Moreover, the country will soon be forced to turn once again to the International Monetary Fund for a financial lifeline, a move that will require Washington’s sufferance.

Given Islamabad’s record of turning over Al Qaeda figures as a means of buying American good will, last week’s announcement of the capture of a militant thought to be in charge of some of the terror network’s international operations may be a further signal that the security establishment wants to mend ties with Washington.

Yet events of the past week herald the beginning of a long summer of political turmoil in Islamabad that makes harder the search for a new equilibrium in U.S.-Pakistan relations.  Don’t be surprised if the resulting exasperation in Washington results in renewed calls for unilateral military action on Pakistani soil, for further reductions in U.S. aid levels, and an for overall approach of “congagement” or “benign neglect” toward Islamabad.

This commentary was originally posted on Chanakya’s Notebook.   I invite you to follow me on Twitter.

Defence And Strategic Affairs Blog

Time to Cool the Rhetoric on Pakistan

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However justified, the public berating of Islamabad has become counterproductive

The comments made by Defense Secretary Leon E. Panetta during his swing through South Asia last week once again raise the question of how coordinated the Obama administration’s regional policy is.  An earlier post flagged this issue two months ago by noting the curious timing of Washington’s decision to offer a large bounty for the arrest or capture of Hafiz Muhammed Saeed, a major jihadi leader allowed to live in plain sight in Pakistan.

True, the decision was overdue and eminently warranted, as Saeed is a man who for too long has escaped the dispensation of justice.  But it was announced in a way sure to rub Islamabad’s already inflamed sensibilities, just as Washington began an effort to salvage collapsing relations with Pakistan.  It was unveiled during a visit to New Delhi by Wendy Sherman, the U.S. Under Secretary of State for Political Affairs, who no doubt wanted to address complaints that the administration was letting Pakistan slide on the issue of anti-Indian terrorism.  But as it was issued on the eve of Deputy Secretary of State Thomas R. Nides’ arrival in Islamabad, the open reminder about their perfidy was a strange way to commence a trip aimed at making nice with Pakistani leaders.

Panetta’s words were similarly understandable but also counterproductive.  While in New Delhi he took a gratuitous swipe at Pakistani officials by publicly joking about the necessity of keeping them in the dark about the U.S. commando mission that killed Osama bin Laden – “They did not know about our operation.  That was the whole point.”  And in Kabul, he lashed out by warning Islamabad that U.S. leaders are reaching “the limits of our patience” regarding the sheltering of Afghan insurgents in the tribal areas.  The rebukes also follow the conspicuous snubbing of President Asif Ali Zardari at the NATO summit in Chicago last month.

To be sure, Panetta’s criticisms are entirely right on the merits.  Evidence of Pakistani treachery is in ample supply and has become the standard by which duplicity among allies will henceforth be measured.  The Abbottabad raid would have ended futilely, and most likely fatally for American forces, were the generals in Rawalpindi brought into U.S. confidence.  Likewise, Pakistan has played an egregious double game in Afghanistan, serving as the toll road for provisions destined for the same U.S. troops being killed and maimed by jihadi militants it enables.  And Panetta’s scolding only echoes the uncharacteristically blunt charges leveled last September by Admiral Mile Mullen, the immediate past chairman of the Joint Chiefs of Staff, who more than anyone else in Washington tried to establish a personal rapport with the Pakistani military leaders.

Yet the public smackdowns also undercut important U.S. interests.  A senior Pakistani military leader is quoted in the Washington Post as saying that he views the pointed joke in New Delhi as “an intended insult” and that “It is not the exclusive domain of the United States to lose its patience.”  The Los Angeles Times reports that the reprimands were so ill-received in Pakistan that they derailed a nearly-complete agreement to reopen key NATO supply lines into Afghanistan that Islamabad shut down after an U.S. airstrike killed 26 Pakistani soldiers near the Afghan border last November.

The closure is costing the United States some $100 million a month as cargo is shipped via more expensive routes through Central Asia.  In recent months, Islamabad has publicly insisted on a sharp increase in transit fees and a fulsome apology for the border incident in exchange for restarting the supply lines.  But according to the Times, Pakistani officials in private had in the last few weeks begun to back away from their public calls and many in Washington thought that a transit deal was within sight.  Now, following Panetta’s criticisms, Islamabad is back to demanding a full public apology.  The upbraiding might also have thrown a spanner in the exploratory talks that U.S. and Pakistani officials have held on a new counterterrorism partnership.

More broadly, the harsh rhetoric does not help the fragile democratization process within Pakistan.  A quick resolution of the transit dispute is very much in Islamabad’s interests.  The thread-bare public treasury –not to mention the Pakistani army’s vast business empire – is in desperate need of revenue that would come from increased transit fees as well as the $3.5 billion in military and economic assistance that the Obama administration has requested for the upcoming fiscal year.  Moreover, the country will soon be forced to turn once again to the International Monetary Fund for a financial lifeline, a move that will require Washington’s assent.

But U.S. officials also need to reckon with the new complexity of Pakistan’s domestic politics.  Gone are the times when a military autocrat could simply order up strategic cooperation with Washington, as Pervez Musharraf did at the outset of the U.S. war on terrorism.  Nowadays, Zardari’s elected government must contend with volatile public opinion that is incensed with perceived U.S. affronts to the country’s sovereignty and honor.  It also does not help that many Pakistanis see Zardari as an American patsy, a contention that his chief political rival, Nawaz Sharif, has seized upon with an alacrity that is matched only by its hypocrisy.

This week’s finding by a judicial commission that Husain Haqqani, Zardari’s first ambassador in Washington, is guilty of disloyalty to the nation provides Sharif with another drum to beat.  So Zardari has very narrow space to maneuver, especially as parliamentary elections approach, perhaps as early as this fall.  Sherry Rehman, the current Pakistani envoy in Washington, rightly notes that Panetta’s blunt rhetoric “leaves little oxygen” to those in Islamabad who seek a better relationship with the United States.

In between his broadsides last week, Panetta also said something that should be borne in mind by every Washington policymaker tempted to express his frustrations and indignations in the open:

It’s a complicated relationship, often times frustrating, often times difficult…. But the United States cannot just walk away from that relationship.  We have to continue to do what we can to try to improve (the) areas where we can find some mutual cooperation.

There is surely a place for tough talk in U.S.-Pakistan relations but these days it’s best kept behind closed doors.

This commentary was originally posted on Chanakya’s Notebook.   I invite you to follow me on Twitter.

Defence And Strategic Affairs Blog

A Tough Week for Pakistani Diplomacy

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Events lay bare just how strategically isolated Islamabad has become

As my last post noted, the events of the past week show that New Delhi is sitting pretty diplomatically, being courted ardently by both Washington and Beijing.  Conversely, they also laid bare just how strategically isolated Islamabad has become.

Pakistan’s most recent troubles began with President Obama giving President Asif Ali Zardari the cold shoulder at the NATO summit in Chicago three weeks ago.  Since then Washington has dramatically ramped up its campaign of drone attacks in the country’s tribal areas, which last week killed Al Qaeda’s second in command in North Warizistan.  Officials in Islamabad publicly denounce the strikes as violating the country’s sovereignty and they have helped drive a marked increase in anti-American sentiment.  Yet U.S. officials reportedly believe that they have very little to lose by defying Pakistani sensitivities.

While Defense Secretary Leon Panetta was in New Delhi last week making overtures for a strategic partnership with Pakistan’s arch-rival – including calls for greater Indian involvement in Afghanistan, a neuralgic issue for the Pakistanis – he was also telling Islamabad to stuff it.  Stoutly defending the drone campaign, he declared that “we have made it very clear that we are going to continue to defend ourselves” and “we are fighting a war” in the tribal badlands.

Adding insult to injury from Islamabad’s view was his public chuckle about the necessity of keeping Pakistani officials in the dark about the U.S. commando raid that killed Osama bin Laden – “They did not know about our operation.  That was the whole point.” – as well as his comparison of U.S.-Pakistan affairs with that of India’s own torturous relationship.  As the Associated Press wryly notes,

You know a friendship has gone sour when you start making mean jokes about your friend in front of his most bitter nemesis.

Panetta regularly traveled to Pakistan during his recent stint as CIA director but has purposively avoided going there in the year since he’s moved over to the Pentagon.  Although his eight-day tour of Asia took him to New Delhi and Kabul, among other places, Islamabad was conspicuously missing from his itinerary.  Indeed, showing up in the Afghan capital, he once again unloaded on the Pakistanis, warning them that U.S. leaders are reaching “the limits of our patience.”  General Martin Dempsey, the chairman of the Joint Chiefs of Staff, followed up by telling reporters in Washington that he too is “extraordinarily dissatisfied” with Pakistani actions.

Further evidence of Islamabad’s deteriorating position came from the transit agreements NATO signed last week with several Central Asian countries in an attempt to bypass Pakistan’s blockade on supplies going into Afghanistan, as well as the multiplying calls in the U.S. Congress for reducing military and economic assistance.

Pakistanis like to believe that China is the trump card they can play against the Americans.  This tenet was once again expressed in a recent op-ed that called on Pakistanis to liberate themselves “from the hold of the West by embracing our friends in the East.”  But the real limits to this strategy were once again apparent over the last few weeks.  During a visit to Islamabad in late May, Chinese Foreign Minister Yang Jiechi publicly pledged Beijing’s firm commitment to “firmly support Pakistan in protecting its sovereignty, independence, territorial integrity and dignity.”  Privately, however, he was counseling Pakistani leaders to settle their differences with the Americans.

Zardari must have been shocked by Chinese actions when he showed up in Beijing for last week’s summit meeting of the Shanghai Cooperation Organization.  Executive Vice Premier Li Keqiang (who is widely expected to become the next head of government) made a special point of telling Indian Foreign Minister S.M. Krishna, also attending the forum, that Sino-Indian ties were destined to become the century’s important bilateral relationship.  Li’s phrase is a virtual echo of the Obama administration’s regular formulation about Washington and New Delhi constituting “an indispensable partnership for the 21st century,” and it signals that the two most important external powers in South Asian security affairs are in competition for India’s strategic allegiances.  Underscoring this point is Beijing’s recent move upgrading its ambassador in New Delhi to vice-ministerial status.

Dawn, Pakistan’s largest English-language newspaper, advised the other week that links with China “should not become cause for complacency or reason to assume that a functional relationship with the U.S. is not critical and long overdue.”  If Pakistani leaders had yet to absorb this lesson, this week’s events should have driven it home.  Perhaps that explains Zardari’s conciliatory reaction to Panetta’s broadsides.

This commentary was originally posted on Chanakya’s Notebook.  I invite you to follow me on Twitter.